Insurance companies placed almost $990 billion of assets with third-party managers, a 9.8% increase from 2006, according to a survey by financial services consultant Patpatia & Associates.
Fifty-eight percent of insurers that were surveyed outsourced at least a portion of their business. Industrywide, roughly 14.4% of insurance assets are run by third-party managers, according to the survey.
Outsourcing business has historically come from property and casualty insurers, rather than life insurers, because of the highly customized, book income investment approaches that life insurance liabilities require, the survey shows. However, this has expanded over the past several years as there are a greater number of insurance specialists with the capabilities to support (asset-liability management)-sensitive strategies, according to the survey.
For the asset management industry it means you have to be more market focused instead of having a product and saying, Let me have people buy it, said Sunny Patpatia, president.
The survey evaluated 49 asset managers and more than 350 U.S. insurance companies with more than $500 million in assets.
Patpatia & Associates is consultant to the investment management, insurance and wealth management industries.